[Senate Report 106-452]
[From the U.S. Government Publishing Office]
Calendar No. 898
106th Congress Report
SENATE
2d Session 106-452
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TO IMPROVE THE CAUSE OF ACTION FOR MISREPRESENTATION OF INDIAN ARTS AND
CRAFTS
_______
October 2 (legislative day, September 22), 2000.--Ordered to be printed
_______
Mr. Campbell, from the Committee on Indian Affairs, submitted the
following
R E P O R T
[To accompany S. 2872]
The Committee on Indian Affairs, to which was referred the
bill (S. 2872) to provide for amendments to the Indian Arts and
Crafts Act of 1990 (IACA, or ``the Act''), P.L. 101-644 (25
U.S.C. 305e), having considered the same, reports favorably
thereon with a bill and recommends that the bill do pass.
Purpose
The purpose of S. 2872 is to provide technical amendments
to improve the enforcement of the IACA for the protection of
the economic and cultural integrity of authentic Indian arts
and crafts, and for other purposes.
Background
Today's market for Indian-made goods currently exceeds $1
billion in revenue, but it is estimated that $400 to $500
million of that demand is being satisfied from non-Indian, and
largely, non-U.S. sources.\1\ This growing influx of
inauthentic Indian arts and crafts has dramatically affected
the Indian arts and crafts market by driving down prices, and
tainting consumer confidence in and the cultural integrity of
the market. With Native communities plagued by unemployment and
stagnant economies, the flood of fake Indian arts and crafts is
decimating one of the few forms of entrepreneurship and
economic development on Indian reservations.\2\
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\1\ John Shiffman, $1 billion Industry Reeling as Faux Crafts Flood
Market, USA Today, April 8, 1998 at 2A; James Brooke, American Indian
Crafts Lose Native Edge As Foreign Fakes Flourish, International Herald
Tribune, August 4, 1997 at 11.
\2\ At the Zuni Pueblo, approximately eighty-five percent of the
population relies on Indian arts and crafts sales as either a primary
or secondary source of income. Due to the importation of inauthentic
Indian arts and crafts, these artisans have noticed that it is more
difficult to sell their work and that their work sells at a reduced
price from that of ten years ago. Implementation of the Indian Arts and
Crafts Act of 1990: Oversight Hearing Before the Senate Committee on
Indian Affairs, 106th Congress (2000) (statement of Tony Eriacho, Jr.,
Board Member, Indian Arts and Crafts Association).
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Imitation Indian arts and crafts are generally mass-
produced, and thus, manufactured at a substantially reduced
cost, generally around ten percent the cost of the original,
authentic good. To compete, traditional Indian artisans are
required to reduce their prices and reduce their profit margin.
As a result, many traditional Indian artisans have retired from
their professions because of this weakening of the market.\3\
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\3\ The Isleta Pueblo's full-time artisan population has reduced
from 150 to 30 individuals over the past ten years. Implementation of
the Indian Arts and Crafts Act of 1990: Oversight Hearing Before the
Senate Committee on Indian Affairs, 106th Congress (2000) (statement of
Andy Abeita, President, Council for Indigenous Art and Culture).
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Another result of the rapid rise in imitation Indian arts
and crafts is that consumer confidence in this market is
declining. Lack of consumer confidence will reduce the demand
for Indian arts and crafts as consumers shift their preference
to goods with greater consumer protections.
The flood of inauthentic Indian arts and crafts also
damages traditional Indian heritage and culture. Indian arts
and crafts are created through time-honored cultural practices
and traditions. Intergenerated continuity of these cultural
practices is threatened when young people are deterred from
becoming artisans because of the changing market that results
from the surge of cheaply made, imitation Indian arts and
crafts. The following statement illustrates the spiritual
nature of traditional Indian artistry.
The intangible thing that separates Native Art from
the generic terminology ``arts and crafts'' is the fact
that the art produced by Indian nations is an extension
of their heart and soul. A Native artist cannot, for
the most part, go out to the local store and purchase
raw materials to make their art or craft. The process
for obtaining the raw materials is an invested effort
of harvesting either animals, plants, or other natural
materials that first need to be processed to a usable
form. Even this is premised by a prayer ceremony to the
Creator, before taking from the land * * * It remains a
very spiritual act in creating an art or craft; and
many still practice the `old Ho Chunk teaching' in that
a flaw is inconspicuously made in the art price in
respect to the Creator, knowing that He is the only
Perfect Creator.\4\
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\4\ Id.
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The 1935 Act and the 1990 Amendments to the Act
The Indian Arts and Crafts Act of 1935 (``the organic
Act'') P.L. 74-355, 25 U.S.C. 305e was enacted to promote
American Indian and Alaskan Native economic development through
the expansion of the Indian arts and crafts market. The organic
Act established the Indian Arts and Crafts Board (IACB) to
promote the development of Indian arts and crafts. As a result,
the IACB focused on establishing and expanding an Indian arts
and crafts market. In addition, the organic Act had two
enforcement mechanisms: (1) the IACB was authorized to
establish a government trademark of genuineness; and (2) the
Act established criminal penalties for the counterfeiting of
the IACB trademark and the misrepresentation of the authentic
Indian arts and crafts. Although the organic Act contained
these enforcement provisions, the promotion of Indian arts and
crafts was the primary focus of the IACB throughout the 1935-
1990 period.
In 1990, the Act was amended to provide stronger
enforcement through enhanced civil and criminal sanctions.\5\
Even with these strengthened enforcement provisions, to date
there has yet to be a civil or criminal conviction under this
Act. In addition, the Department of Interior has yet to issue
trademark regulations regarding the trademark provisions
pursuant to the organic Act and the 1990 amendments to the
organic Act.
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\5\ P.L. 101-644 Sec. 104-105.
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Under the 1990 amendments, the criminal penalties for
individuals who violate the statute range from a fine of
$250,000 to $1,000,000 and/or a prison sentence ranging from
five to fifteen years, depending on whether the defendant is a
repeat offender. In addition, a corporation is liable for a sum
of $1,000,000 on its first offense and up to $5,000,000 on
subsequent offenses. Civil sanctions include injunctive and
other equitable relief, monetary damages, punitive damages and
attorneys fees.
In criminal cases, only the Attorney General of the United
States (``Attorney General'') has standing to prosecute
possible violations of the Act. The IACB's role in a criminal
case is to receive a complaint, recommend that the Federal
Bureau of Investigation (FBI) investigate the merit of the
complaint, and then the IACB may recommend that the Attorney
General proceed with a criminal action. The 1990 amendments
designate only the Attorney General and an Indian tribe \6\ as
having standing to bring civil suit under the Act. The IACB's
role in a civil case is to receive a complaint, recommend that
the FBI investigate the merit of the complaint, and then
recommend that the Secretary of the Interior refer the matter
to the Attorney General for civil prosecution.
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\6\ An Indian tribe may bring a civil cause of action for either
itself, an individual Indian, or an Indian arts and crafts association.
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Section-by-Section Analysis
Sec. 1. Short Title.
The title of this act is the Indian Arts and Crafts
Enforcement Act of 2000.
Sec. 2.
Amendments to Civil Action Provisions. All amendments will
be made to Section 6 of the IACA.
Section 6(a). To enhance the ability of the plaintiff to
assess and calculate damages, the phrase ``directly or
indirectly'' will be added after the phrase ``against a person
who.'' This provision clarifies that suit may be brought
against a manufacturer and/or supplier when the plaintiff is
not in direct competition with the manufacturer or supplier.
For example, this language would authorize an Indian tribe to
bring civil suit against wholesalers and others involved in the
chain of distribution, although these defendants may not be the
final retailer who sells the violative product.
Section 6(a)(2)(B). This section is amended to clarify how
treble damages can be assessed. Plaintiffs who bring suit under
the IACA, like other consumer protection cases, have difficulty
in proving and quantifying damages. For example, lost or
diminished sales attributable to the complained behavior, are
difficult or impossible to prove. With this amendment,
plaintiffs may use the defendant's profits from selling the
violative product as a basis for assessing damages. This
approach is similar to how the Lanham Act assesses damages.\7\
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\7\ 15 U.S.C. at Sec. 1117 (1946).
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Section 6(c)(1)(B). Under Section 305e(c), only the
Attorney General or an Indian tribe may bring civil suit for
alleged violations of the IACA. This amendment authorizes both
Indian arts and crafts organizations and individual Indians to
bring suit for alleged violations of the Act.
To date, there has not been a successful prosecution under
the IACA. One of obstacles in enforcing the IACA has been the
lack of suits initiated by either the Attorney General and
individual Indian tribes. Often these entities are not
aggressive in bringing suits on behalf of individual artisans
and/or artisan organizations because the Attorney General or an
Indian tribe suffer no direct injury. Individual Indian
artisans and artisan organizations suffer both financial and
cultural injury from inauthentic Indian arts and crafts
entering the market. By broadening standing under the statute,
the Committee's intent is to encourage greater enforcement of
the Act.
Section 6(c). This section is amended to authorize the
Attorney General to allocate a portion of the damages collected
in a successful prosecution to reimburse the IACB for its costs
in investigating and bringing about the successful prosecution
of the suit.
Section 6(d)(2). This section is amended to make the
definition of Indian products more precise throughout the
regulatory process. This amendment requires the IACB to
promulgate regulations which include specific examples of
Indian products to provide guidance to the artisans, as well as
purveyors and consumers, of Indian arts and crafts.
Legislative History
A hearing on the implementation of the Act was held on May
17, 2000 and the Indian Arts and Crafts Enforcement Act of 2000
(S. 2872) was introduced on July 14, 2000, by Senator Campbell,
for himself, and for Senators Bingaman, Kyl, Domenici, and
Johnson. S. 2872 was referred to the Committee on Indian
Affairs on July 14, 2000. On July 26, 2000, the Committee on
Indian Affairs convened a business meeting to consider S. 2872
and other measures that had been referred to it, and on that
date, the Committee ordered S. 2872 reported favorably without
an amendment.
Committee Recommendation and Tabulation of Vote
On July 26, 2000, the Committee on Indian Affairs, in an
open business session adopted S. 2872 by voice vote and ordered
the bill reported favorably to the full Senate.
Cost and Budgetary Consideration
The cost estimate for S. 2872 as calculated by the
Congressional Budget Office, is set forth below:
U.S. Congress,
Congressional Budget Office,
Washington, DC, August 7, 2000.
Hon. Ben Nighthorse Campbell,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 2872, the Indian
Arts and Crafts Enforcement Act of 2000.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Lanette J.
Keith.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
S. 2872--Indian Arts and Crafts Enforcement Act of 2000
CBO estimates that implementing S. 2872 would have no
significant impact on the federal budget. Because enactment of
S. 2872 would not affect direct spending or receipts, pay-as-
you-go procedures would not apply to the bill. S. 2872 contains
no intergovernmental or private-sector mandates as defined in
the Unfunded Mandates Reform Act and would impose no costs on
state, local, or tribal governments.
S. 2872 would allow Indian arts and crafts organizations to
seek damages in the federal courts from persons misrepresenting
arts and crafts as having been produced by Indians. Based on
information from the Administrative Office of the United States
Courts, CBO expects that any increase in federal costs for
court proceedings would not be significant because of the small
number of cases likely to be involved. Any additional costs to
implement the bill would be subject to the availability of
appropriated funds.
The CBO staff contact for this estimate is Lanette J.
Keith. The estimate was approved by Robert A. Sunshine,
Assistant Director for Budget Analysis.
Regulatory Impact Statement
Paragraph 11(b) of rule XXVI of the Standing Rules of the
Senate requires that each report accompanying a bill to
evaluate the regulatory paperwork impact that would be incurred
in implementing the legislation. The committee has concluded
that enactment of S. 2872 will create only de minimis
regulatory or paperwork burdens.
Executive Communications
The Committee has received no official communication from
the Administration on the provisions of the bill.
Changes in Existing Law
In compliance with subsection 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill are required to be set out in the accompanying
Committee report. The Committee finds that enactment of S. 2872
will result in the following changes to 25 U.S.C. Sec. 305(e),
with existing language which is to be deleted in bold brackets
and new language to be added in italic:
25 U.S.C. 205e(a)
(a) Injunctive or Equitable Relief; Damages.--
A person specified in subsection (c) of this section may,
in a civil action in a court of competent jurisdiction, bring
an action against a person who, directly or indirectly, offers
or displays for sale or sells, a good, with or without a
Government trademark, in a manner that falsely suggests it is
Indian produced, an Indian product, or the product of a
particular Indian or Indian tribe or Indian arts and crafts
organization, resident within the United States, to--
(1) obtain injunctive or other equitable relief; and
(2) recover the greater of--
(A) treble damages; or
(B) in the case of each aggrieved individual
Indian, Indian tribe, or Indian arts and crafts
organization, not less than $1,000 for each day
on which the offer or display for sale or sale
continues.
For purposes of paragraph (2)(A), damages shall include any
and all gross profits accrued by the defendant as a result of
the activities found to violate this subsection.
25 U.S.C. 305e(c)
(c) Persons Who May Initiate Civil Actions.--
(1) A civil action under subsection (a) of this
section may be commenced--
(A) by the Attorney General of the United
States upon request of the Secretary of the
Interior on behalf of an Indian who is a member
of an Indian tribe or on behalf of an Indian
tribe or Indian arts and crafts organization;
[or]
(B) by an Indian tribe on behalf of itself,
an Indian who is a member of the tribe, or on
behalf of an Indian arts and crafts
organization[.]. or
(C) by an Indian arts and crafts organization
on behalf of itself, or by an Indian on behalf
of himself or herself.
(2) Any amount recovered pursuant to this section
shall be paid to the individual Indian, Indian tribe,
or Indian arts and crafts organization, except that--
(A) in the case of paragraph (1)(A), the
Attorney General may direct from [the amount
recovered the amount] the amount recovered--
(I) the amount for the costs of suit
and reasonable attorney's fees awarded
pursuant to subsection (b) of this
section and deposit the amount of such
costs and fees as a reimbursement
credited to appropriations currently
available to the Attorney General at
the time of receipt of the amount
recovered; and
(ii) the amount for the costs of
investigation awarded pursuant to
subsection (b) and reimburse the Board
the amount of such costs incurred as a
direct result of Board activities in
the suit; and
(B) in the case of paragraph (1)(B), the
amount recovered for the costs of suit and
reasonable attorney's fees pursuant to
subsection (b) of this section may be deducted
from the total amount awarded under subsection
(a)(2) of this section
25 U.S.C. 305e(d)(2)
(2) subject to subsection (f), the terms ``Indian
product'' and ``product of a particular Indian tribe or
Indian arts and crafts organization'' has the meaning
given such term in regulations which may be promulgated
by the Secretary of the Interior;
25 U.S.C. 305e(f)
(f) Not later than 180 days after the date of enactment of
the Indian Arts and Crafts Enforcement Act of 2000, the Board
shall promulgate regulations to include in the definition of
the term `Indian product' specific examples of such product to
provide guidance to Indian artisans as well as to purveyors and
consumers of Indian arts and crafts, as defined under this Act.